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A Compendium of Property & Capital News
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Aug 18
A Compendium of Property & Capital News

Newmark Rolling Out 200 State St. for GLL; Garage/Office Tower Could Yield Near $220M

July 31, 2018 — By Joe Clements
200 State Street, Boston MA

BOSTON—Abutting Quincy Market, the retail shops at 200 State St. are a popular draw among tourists and downtown workers alike, but they are not included in a big-ticket item expected to bring its own surge of shopping traffic this summer, that being the 16-story structure’s 120-stall parking garage and 304,000-sf of first Class office space which Newmark Capital Markets is rolling out on behalf of GLL Real Estate Partners GmbH, owners since paying $167 million in September 2008.

Newmark did not return phone calls as of press deadline, but multiple sources concur 200 State St. is being pitched through the CRE brokerage in a cycle where top-flight office product in Boston and Cambridge is trading at record levels. “They have that, no doubt,” relays one source regarding the fresh assignment, one which would give the Newmark investment sales team led by Robert E. Griffin Jr., Edward C. Maher Jr. and Matthew E. Pullen three tower listings within blocks of each other, the others being 75 State St. and Exchange Place at 53 State St.

It is unclear what the status of those two listings are, and there apparently is no allocation guidance for 200 State St., but the asset could trade well into the “low 200 millions” in one source’s view, perhaps around $220 million if that and other estimates prove accurate. Another industry veteran places the likely action between $210 million and $220 million, or roughly $690 to $723 per sf depending on where it settles. At $715 million, it would mandate $707 per sf to win the day.

Already at least one downtown tower has crested $700 per sf this season, with 28 State St. bought by a Midwest investor this summer for $418 million—$731 per sf—that deal transacted through Eastdil Secured as previously unveiled by Real Reporter.

Prior articles have pegged 75 State St. bidding in the $640 million range and indicate 53 State St. could deliver in excess of $800 million for client UBS Investments. Those, too, are unofficial estimates, with no formal acknowledgment of their accuracy from the involved parties. In the Seaport District, 370,000 sf at 200 Pier Four is being acquired by a California pension fund for almost $1,190 per sf, its pending $440 million trade by developer Tishman Speyer also a Newmark exclusive.

Nonetheless, those familiar with 200 State St. insist it will compete vigorously with other opportunities in play. “It is gorgeous . . . and you cannot beat the location,” observes one CRE denizen regarding the sleek building developed by homegrown Sullivan Properties inches from the Interstate 93 viaduct, an imposing, rusting behemoth since vanquished underground and replaced by the verdant Rose Fitzgerald Kennedy Greenway thanks to the $15 billion Big Dig. The enduring building serves as eastern gateway to both Quincy Market and the State Street business corridor which is the traditional epicenter of downtown Boston.

Other benefits being touted about 200 State St. include a 96 percent occupancy rate with 21 tenants whose weighted average leasing term remaining is over five years. Feeding off its own denizens plus tourists coming to Quincy Market and the New England Aquarium and the Financial District activity makes the garage among the best revenue generators of its ilk citywide, one contributor indicates. And whatever rollover may occur would free up space in a city where office rents are also hitting new highs, promising near-term upside for a buyer.

According to Midyear figures from Newmark, the current CBD first class rent is averaging $61.45 per sf compared to $47.69 per sf at year end 2012 when the rebound first took shape, the vacancy rate then 13.3 percent. Newmark puts the current vacancy at a scant 8.4 percent for 65.7 million sf of inventory, with the Financial District at 8.1 percent vacancy for 32.6 million sf despite recording almost 115,000 sf in negative net absorption for the opening two frames of 2018. Class A rates there are averaging $55 per sf, Newmark reports,

The Newmark team led is quite familiar with 200 State St., having been the brokers a decade ago advising then-seller Broadway Real Estate Partners on the prior sale and bringing GLL to the table, that when they were at Cushman & Wakefield. As part of the upcoming campaign, Newmark Executive Managing Directors William Anderson and Debra Gould and Senior Managing Director Tim Bianchi will provide bidders real-time guidance on urban office trends, that trio quite familiar with the downtown as well as 200 State St., serving as exclusive leasing agents for GLL.

Robert Griffin Edward Maher Matthew Pullen Timothy Bianchi Deb Gould Bill Anderson